Moody’s estimates 12% rise vs Nov’s 14.6% VoPI
Philippine manufacturing output growth likely eased in December 2016, with food production showing the belated impact of a strong typhoon that hit the main northern island of the country in October, Moody’s Analytics said.
The economic research arm of Moody’s Investors Service over the weekend estimated that the rise in manufacturing output lost some momentum to 12 percent in December from a 14.6 percent increase in November as measured by the Volume of Production Index (VoPI).
It acknowledged, however, that compared with a 5 percent rise a year-earlier, the December rate of growth has accelerated.
The Philippine Statistics Authority (PSA) is scheduled to release the December manufacturing output data on Friday, February 10.
Lawin’s damage on crops
“The main drag will come from food manufacturing, reflecting the negative effects that typhoon Lawin had on crop output,” Moody’s Analytics said in its research note.
The typhoon battered Ilocos, Cagayan Valley, Central Luzon and the Cordillera regions, with the damage to agriculture estimated at P10.2 billion. The Department of Agriculture reported 467,068 hectares of agricultural land were damaged and the production loss was estimated at 244,224 metric tons.
“Nevertheless, the overall story for the industrial sector remains positive,” Moody’s Analytics said.
Electronics to see stronger demand
In particular, Moody’s research arm expects electronics manufacturing to accelerate in the coming months thanks to stronger global demand.
In November 2016, the manufacturing sector grew 14.6 percent as measured by the Volume of Production Index, compared with 4.4 percent in November 2015 and 11.3 percent in October 2016.
The National Economic and Development Authority (NEDA) said the manufacturing sector is expected to exhibit stronger growth in December 2016 because of increased consumer demand during the Christmas season of 2016, compared with 2015.
“Looking ahead, we see the sector benefiting from strong private and public investments,” Socioeconomic Planning Secretary Ernesto Pernia said earlier this month after the release of the November factory output data.
“Low inflation, low unemployment and strong remittances will also continue to drive domestic demand, and will boost manufacturing in the Philippines,” he said.
Pernia had also urged the government to pursue efforts that boost the country’s manufacturing sector and provide quality jobs.
“One is through encouraging innovation in manufacturing so that we remain competitive with the rest of the world. Second, we need to minimize bureaucratic procedures and regulatory barriers to attract investments and to reduce the cost of doing business and expand production capacity,” he said.
“Lastly, we must make sure that the technical skills of our labor force are in line with industry needs, and that opportunities to enhance technical competencies are available to people in the low-income and far-flung areas of our country,” Pernia added.